RTTNews - The Hong Kong Monetary Authority and De Nederlandsche Bank N.V. (DNB) jointly announced on Tuesday the signing of a Memorandum of Understanding for a liquidity arrangement to be applied for non-routine situations.

According to the arrangement, Dutch banks operating in Hong Kong or Hong Kong banks operating in the Netherlands can approach the HKMA or DNB to ask for liquidity assistance if needs arise. The new arrangement is intended to raise the confidence of banks in carrying out their business in the two markets.

HKMA Chief Executive, Joseph Yam stated, This liquidity arrangement represents a new area of monetary co-operation between the HKMA and DNB, which should enhance financial stability in the two areas with greater assurance about availability of back-up liquidity under the new arrangement.

The provision of liquidity assistance will be based on cash collateral and it will remain at the sole discretion of the respective central bank. The central bank said the liquidity providing central bank can quickly access an alternative and reliable source of collateral in addition to those under routine liquidity arrangements.

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